The urge to save: Even homeless workers can learn to be thrifty

Novelist F. Scott Fitzgerald observed that the rich “are different from you and me.” He was invested in the then persistent myth that wealthy folks are a whole other species of human.

His friend Ernest Hemingway was skeptical about any intrinsic differences between those who are well off and everyone else. Were he still with us, he may have found some validation in a study conducted by the University of Pittsburgh and Arizona State University.

Last year, the researchers looked at the savings rates of 123 employed residents of a Phoenix homeless shelter. The researchers initiated a competition that had the residents vying for a $100 prize and the honor of being the shelter’s biggest saver. On average, the savings rate went up 33 percent, but some failed to save anything at all.

The top 25 percent saved an average $607 while the top 10 percent saved $1,000 or more. The researchers discovered that those who were already motivated to save did even better with a $100 incentive, while those who would not bother to save were unmoved by the offer of a prize. The big savers were those who had a strategy for leaving the shelter.

The researchers believe the competition was successful in its first month because the homeless — who worked as janitors, cooks or at other jobs — knew they were competing against each other and not people outside their group. They believed they had a shot to win if they competed on a level playing field.

The researchers are sifting through the data to understand more about the behavior. Ultimately, they want to find ways of creating an incentive for middle-class people to save more.

Fitzgerald might be surprised to find that the homeless, who are far from rich, have the kind of savings gumption that could improve their lives. Hemingway would not be surprised at all.

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